IMF says it’s ready to mobilize its $1 trillion lending capacity to fight coronavirus

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(cnbc) – The International Monetary Fund on Monday said it “stands ready” to use its $1 trillion lending capacity to help countries around the world that are struggling with the humanitarian and economic impact of the novel coronavirus.

“As a first line of defense, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs,” IMF managing director Kristalina Georgieva said in a statement.

“The Fund already has 40 ongoing arrangements — both disbursing and precautionary — with combined commitments of about $200 billion,” she added. “In many cases, these arrangements can provide another vehicle for the rapid disbursement of crisis financing.”

Georgieva wrote on the IMF’s website that the lending could be used to aid its members, especially emerging and developing countries.

She said the Fund’s Catastrophe Containment and Relief Trust “can help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation. 

The announcement comes ahead of what’s expected to be another dismal day on Wall Street despite a multilateral move by the globe’s central banks to ease monetary policy to help countries cope with the fallout of the coronavirus.

The Federal Reserve, for example, said Sunday that it will embark on a historic and massive monetary stimulus campaign to juice economic growth. The central bank said it will slash U.S. interest rates to zero and launch a $700 billion quantitative easing program to shelter the economy from the effects of the virus.

Still, equity traders were left nervous about the coronavirus and efforts to contain its spread, which some fear could tip the economy into a recession.

The SPDR S&P 500 ETF Trust (SPY) — which tracks the S&P 500 — plummeted more than 9% in the premarket, signaling that the coordinated effort may not be enough to buoy investor sentiment.

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